Method and system for processing data related to a deferred annuity with available benefit payments and a deferral bonus

ABSTRACT

A computer implemented data processing system and method administers a deferred variable annuity contract during the accumulation phase for a relevant life. The annuity contract has a payment base value, a contract value, and benefit payments. A maximum annual benefit payment withdrawal amount available without reducing the payment base value is calculated by multiplying the payment base value by a factor including a deferral bonus percent, which is a function of a number of years deferred by the relevant life until taking a first lifetime benefit payment.

CROSS-REFERENCE TO RELATED APPLICATIONS

This application is a continuation application of co-pending U.S. patentapplication Ser. No. 11/985,467 entitled METHOD AND SYSTEM FOR PROVIDINGA DEFERRED VARIABLE ANNUITY WITH LIFETIME BENEFIT PAYMENTS RELATED TO AWITHDRAWAL PERCENT AND A DEFERRAL BONUS PERCENT, filed Nov. 15, 2007,the entire contents of which are herein incorporated by reference forall purposes.

BACKGROUND OF THE INVENTION

1. Field of the Invention

The present invention relates to a method and system for providing adeferred variable annuity contract with lifetime benefit payments; andmore particularly, to a data processing method for administering adeferred variable annuity contract for a relevant life, the annuitycontract having a payment base, a contract value, and a guarantee oflifetime benefit payments, wherein the lifetime benefit paymentavailable for each period is equal to: (a Withdrawal Percent+a deferralbonus percent)×(a Withdrawal Base).

2. Description of the Prior Art

An immediate annuity is typically used to provide an income streamwithin a predetermined length of time from the date the premium isreceived. The amount of income can be either fixed or variable in natureand typically, these products do not provide an account value. Adeferred annuity is typically used to provide accumulation and,potentially, a future stream of annuity income. The deferred annuitycomprises an accumulation period during which the account value willvary with the underlying investments and an annuitization period wherethe client purchases an immediate annuity with the account valueavailable. Deferred and immediate annuities typically provide guaranteedincome for life, which transfers some portion or all of the risk ofoutliving one's accumulated assets to the insurer.

One basis for distinguishing commonly available deferred annuities iswhether the annuity is classified as a “fixed annuity” or a “variableannuity”.

In a fixed annuity, the insurer guarantees a fixed rate of interestapplicable to each annuity deposit. Therefore, a fixed annuity isdesirable for those seeking a “safe” investment. The guaranteed interestrate may apply for a specified period of time, often one year or more.Often, a rate guaranteed for more than one year is called a “multi-yearguarantee”. The rate credited on a fixed annuity is reset periodically,moving in an amount and a direction that correlate the yields availableon fixed-income investments available to the insurer.

With a variable annuity, the annuity contract owner bears the investmentrisk. The relevant life typically has a choice of funds in which he/shecan direct where the annuity deposits will be invested. The variousfunds or sub-accounts may include stocks, bonds, money marketinstruments, mutual funds, and the like.

Variable annuity contracts typically provide a death benefit. Oftentimesduring the accumulation period, the death benefit is related to thecontract value. That is, if the sub-accounts backing the contract valuehave performed poorly, then the death benefit may be reduced to aninsignificant amount. After annuitization, the death benefit can be afunction of the remaining payments of the annuity at the time of therelevant life's death. Further, if the annuity contract does not providea guarantee (discussed below), the contract will terminate when thecontract value goes to zero or some other amount specified in thecontract or rider.

Annuity contracts may also provide guarantees in several differentvariations. A Guaranteed Minimum Death Benefit (GMDB) is a guaranteethat provides a minimum benefit at the death of the relevant liferegardless of the performance of the underlying investments. AGuaranteed Minimum Income Benefit (GMIB) is a guarantee that willprovide a specified income amount at the time the contract isannuitized. The income payment will be dependent on previously stateddetails set out in the contract. A Guaranteed Minimum AccumulationBenefit (GMAB) is a benefit that guarantees a specified contract valueat a certain date in the future, even if actual investment performanceof the contract is less than the guaranteed amount. A Guaranteed MinimumWithdrawal Benefit (GMWB) is a guarantee of income for a specifiedperiod of time, and in some versions, the income stream is guaranteedfor life without requiring annuitization as in the guaranteed minimumincome benefit. However, this guarantee will automatically annuitize thecontract if the contract value is reduced to zero or some other amountspecified in the contract or rider.

Most deferred variable annuity products in the prior art typicallydetermine the amount of the yearly lifetime benefit payments, if any, tobe a predetermined percentage (withdrawal percent) of a withdrawal base.The withdrawal base amount is typically set at the time of the firstlifetime benefit payment and is fixed for the remainder of the term ofthe annuity product. Further, the withdrawal percent is typically fixedafter the first lifetime benefit payment is requested, or alternativelythe withdrawal percent varies slightly for the remainder of the term ofthe annuity product. However, the actual number of years since thepurchase date of the annuity contract is typically not taken intoconsideration when determining the respective withdrawal percents.

Many financial products and systems have been disclosed. These include:information relevant to financial products having a future benefitconditioned on life expectancies of both an insured and a beneficiary; apost employment qualified health care benefit plan funded during acovered person's working years to covered persons under the plan, aretirement plan funded with a variable life insurance policy and/or avariable annuity policy; a benefit plan providing systematic withdrawalpayments during a liquidity period and annuity payments when thesystematic withdrawal payments cease, and financial instrumentsproviding a guaranteed growth rate and a guarantee of lifetime payments.

Each one of these prior art references suffers from at least thefollowing disadvantage(s): the relevant life does not have theflexibility to be able to choose to defer payments upon eligibility inorder to receive a deferral bonus added onto the original payment foreach subsequent year.

Accordingly, there remains a need in the art for a data processingmethod for administering a deferred annuity contract for a relevant lifewherein the annuity contract contains lifetime benefit payments, whereinthe relevant life has the flexibility to be able to choose to deferpayments in order to receive bonuses in addition to the paymentsreceived for each subsequent year. Furthermore, the lifetime benefitpayment for each period is determined by the following formula:LBP withdrawal=(a Withdrawal Percent+a Deferral Bonus Percent)×(aWithdrawal Base),

-   -   wherein the deferral bonus percent is a function of the number        of years deferred by the relevant life until taking a first        lifetime benefit payment.

SUMMARY OF THE INVENTION

The present invention provides a data processing method foradministering a deferred variable annuity contract during theaccumulation phase wherein the annuity contract has lifetime benefitpayments and the lifetime benefit payment for each period is determinedby the following formula:LBP withdrawal=(a Withdrawal Percent+a deferral bonus percent)×(aWithdrawal Base),

-   -   wherein the withdrawal percent is predetermined according to a        withdrawal percent chart and the deferral bonus percent is a        function of the number of years deferred by the relevant life        until taking a first lifetime benefit payment.        In prior art annuity products, the withdrawal percent is        typically determined by a predetermined withdrawal percent chart        that provides a particular withdrawal percent for each year of        the relevant life's life according to each birthday of the        relevant life. The present data processing method administers an        annuity contract having a payment base and a contract value,        together with a guarantee of lifetime benefit payments.

Generally stated, the method of the invention calculates a withdrawalbase for the annuity contract that is preferably related to the previouspremium payments and withdrawals by the relevant life, and could includeinvestment performance on an annual or other basis (daily, monthly,etc.). The method predetermines a withdrawal percent for the annuitycontract, wherein the withdrawal percent is preferably related to theattained age of the relevant life. Preferably, the method of the presentinvention determines a withdrawal percent chart that provides aparticular withdrawal percent for each respective attained age of therelevant life's life. If requested by the relevant life, the presentmethod periodically accepts premium payments from the relevant life,which increase the payment base and the contract value. If requested bythe relevant life, or if other defined criteria are reached, the presentmethod periodically calculates a lifetime benefit payment for therelevant life, which decreases the contract value, wherein the lifetimebenefit payment is determined by the following formula:LBP withdrawal=(a Withdrawal Percent+a Deferral Bonus Percent)×(aWithdrawal Base),

-   -   wherein the deferral bonus percent is a function of the number        of years deferred by the relevant life until taking a first        lifetime benefit payment.        If requested by the relevant life, the present method        periodically calculates a withdrawal payment—that is in excess        of the lifetime benefit payment—for the relevant life which        decreases each of: the contract value and the payment base. Upon        the death of the relevant life, the present method calculates a        death benefit for a beneficiary, wherein the death benefit is        the greater of: (a) the guaranteed death benefit amount; and (b)        the present contract value.

Preferably, the annuity contract of the data processing method is adeferred variable annuity and further includes sub-accounts whose marketperformance can cause the contract value to decrease. In other aspectsof the invention, the annuity product may be selected from the group offixed, combination variable/fixed, and equity indexed annuities.

In addition, the account may be subject to M, E & A, 12 b-I and fundlevel charges. These charges may or may not be assessed against thecontract value.

In a preferred embodiment, the guaranteed death benefit is paid to thebeneficiary only if the relevant life dies during the accumulationphase. However, a guaranteed death benefit may also be payable duringannuitization as well. The lifetime benefit payment may be paid onceyearly or periodically throughout the year; however, there is a maximumlifetime benefit payment for any given year. In one embodiment, thepresent method allows the relevant life to have the opportunity torequest a lifetime benefit payment during each period, wherein thewithdrawal base is the greater of (the payment base) and (the contractvalue). Therefore, in this embodiment, the lifetime benefit payment isnot based on a percentage of a fixed withdrawal base amount, and thewithdrawal base amount may increase depending on the performance of theunderlying investments of the annuity product and if the contract valueis greater than the payment base during a given period. However, if thecontract value is less than the payment base, then the availablelifetime benefit payment is a percentage (withdrawal percent+deferralbonus percent) of the payment base.

The relevant life is eligible to take advantage of the withdrawalpercent provided by the predetermined withdrawal percent chart and ispreferably based on the respective attained age of the relevant life'slife. The deferral bonus is added to the withdrawal percent, wherein thedeferral bonus percent is a function of the number of years deferred bythe relevant life until taking a first lifetime benefit payment.Accordingly, the relevant life has the opportunity to request a lifetimebenefit payment that has the potential to afford a greater monetaryvalue at an earlier point in time and at an earlier age than prior artannuity products.

In one aspect, the value of the annuity payments, if necessary, equalsthe value of the most recent lifetime benefit payment. In other aspects,excess withdrawals, required minimum distributions or step-ups couldcause the value of the annuity payments or guaranteed lifetime benefitpayments to change.

In another aspect of the invention, there is provided a data processingmethod for administering a deferred variable annuity contract for arelevant life, the annuity contract having a payment base, a contractvalue and lifetime benefit payments, comprising the steps of: (i)determining a withdrawal base; (ii) determining a withdrawal percent;and (iii) calculating a lifetime benefit payment, wherein the lifetimebenefit payment is determined by the following formula:LBP withdrawal=(the Withdrawal Percent+a Deferral Bonus Percent)×(aWithdrawal Base),

-   -   wherein the deferral bonus percent is a function of the number        of years deferred by the relevant life until taking a first        lifetime benefit payment.

The invention can comprise a deferred variable annuity contract having:(i) means for calculating a withdrawal base; (ii) means for determininga withdrawal percent; (iii) means for calculating a lifetime benefitpayment; wherein the lifetime benefit payment is determined by thefollowing formula:LBP withdrawal=(a Withdrawal Percent+a Deferral Bonus Percent)×(aWithdrawal Base),

-   -   wherein the deferral bonus percent is a function of the number        of years deferred by the relevant life until taking a first        lifetime benefit payment.

In another aspect of the invention, there is provided a data processingsystem for administering a deferred variable annuity contract having apayment base, a contract value and lifetime benefit payments,comprising: a storage device; a processor coupled to the storage device,the storage device storing instructions that are utilized by theprocessor, the instructions comprising: (a) an instruction forcalculating a withdrawal base; (b) an instruction for determining awithdrawal percent; (c) an instruction for calculating a lifetimebenefit payment; wherein the lifetime benefit payment withdrawal isdetermined by the following formula:LBP withdrawal=(a Withdrawal Percent+a Deferral Bonus Percent)×(theWithdrawal Base),

-   -   wherein the deferral bonus percent is a function of the number        of years deferred by the relevant life until taking a first        lifetime benefit payment.        The present invention solves several of the problems associated        with conventional administration of annuity products.        Determination of the lifetime benefit payment is accomplished        via an improved formula that provides the potential to afford a        greater monetary value for the lifetime benefit payment at an        earlier point in time and at an earlier age than prior art        annuity products. A deferral bonus percent is added to the        withdrawal percent if the relevant life defers the first        lifetime benefit payment by a number of years. The relevant life        is thereby afforded increased security by the availability of a        potentially enhanced lifetime benefit payment at an earlier age.

Other objects, features, and characteristics of the present invention,as well as the methods of operation and functions of the relatedelements of the structure, and the combination of parts and economies ofmanufacture, will become more apparent upon consideration of thefollowing detailed description with reference to the accompanyingdrawings, all of which form a part of this specification.

BRIEF DESCRIPTION OF DRAWINGS

A further understanding of the present invention can be obtained byreference to a preferred embodiment set forth in the illustrations ofthe accompanying drawings. Although the illustrated embodiment is merelyexemplary of systems for carrying out the present invention, both theorganization and method of operation of the invention, in general,together with further objectives and advantages thereof, may be moreeasily understood by reference to the drawings and the followingdescription. The drawings are not intended to limit the scope of thisinvention, which is set forth with particularity in the claims asappended or as subsequently amended, but merely to clarify and exemplifythe invention.

For a more complete understanding of the present invention, reference isnow made to the following drawings in which:

FIG. 1 is a flow chart illustrating the manner in which a new annuitycontract application is processed;

FIG. 2 is a flow chart that illustrates in more detail the manner inwhich an annuity contract is established;

FIG. 3 is a flow chart that illustrates in more detail the manner inwhich an account value is set up;

FIG. 4 is a flow chart that illustrates in more detail the manner inwhich customer communication is established;

FIG. 5 is a flow chart illustrating the appropriate steps after awithdrawal is requested;

FIG. 6 is a flow chart illustrating an embodiment of the presentinvention comprising a data processing method for administering anannuity contract for a relevant life;

FIG. 7 is a diagram illustrating the system on which the methods of thepresent invention may be implemented in accordance with an embodiment ofthe present invention;

FIG. 8 depicts a table illustrating lifetime benefit payments issued tothe relevant life for annuities associated with various ages along withsupplemental tables in accordance with an embodiment of the presentinvention; and

FIG. 9 depicts a graph illustrating lifetime benefit payments issued tothe relevant life for annuities associated with various ages inaccordance with an embodiment of the present invention.

DESCRIPTION OF THE PREFERRED EMBODIMENTS

As required, a detailed illustrative embodiment of the present inventionis disclosed herein. However, techniques, systems and operatingstructures in accordance with the present invention may be embodied in awide variety of forms and modes, some of which may be quite differentfrom those in the disclosed embodiment. Consequently, the specificstructural and functional details disclosed herein are merelyrepresentative, yet in that regard, they are deemed to afford the bestembodiment for purposes of disclosure and to provide a basis for theclaims herein, which define the scope of the present invention. They aredeemed to afford the best embodiment for purposes of disclosure; butshould not be construed as limiting the scope of the invention. Thefollowing presents a detailed description of the preferred embodiment ofthe present invention.

The present invention comprises a data processing method foradministering a deferred variable annuity contract having a paymentbase, a contract value, and lifetime benefit payments. The lifetimebenefit payment available for each period is determined by the followingformula:LBP withdrawal=(a Withdrawal Percent+a Deferral Bonus Percent)×(aWithdrawal Base),

wherein the deferral bonus percent is a function of the number of yearsdeferred by the relevant life until taking a first lifetime benefitpayment.

As used herein, the term “annuity contract” means a set of rules andother data that are reflected in a computer processing system foroperations of the annuity product. The present data processing method ispreferably in the form of a rider to a variable annuity contract. Inanother aspect of the invention, the present data processing method isnot in the form of a rider, but is a part of the base contract. Inexchange for paying higher fees, the relevant life receives severaladvantages by selecting the method and system of the present inventionwhich provides a lifetime benefit payment available for each period thatis related to a withdrawal percent, and further provides a deferralbonus percent to be added to the withdrawal percent if the relevant lifedefers the first lifetime benefit payment by a number of years,regardless of the actual age of the relevant life. These advantagesinclude the following:

The relevant life will have the opportunity to request a lifetimebenefit payment during each period. Preferably, the lifetime benefitpayment is based on a withdrawal percent that is provided by apredetermined withdrawal percent chart. The present invention furtherprovides a deferral bonus percent that is related to the number of yearsdeferred by the relevant life until taking a first lifetime benefitpayment, regardless of the actual age of the relevant life. The deferralbonus percent is added to the withdrawal percent when calculating thelifetime benefit payment. The relevant life is eligible to takeadvantage of the deferral bonus percent regardless of his actual age.Accordingly, depending on the age of the relevant life at the time hepurchases the annuity contract, the relevant life has the opportunity torequest a lifetime benefit payment that has the potential to afford agreater monetary value at an earlier point in time then prior artannuity products. This advantage is especially beneficial to a personwho purchases the annuity contract at a relatively early age and waitsmany years prior to requesting a first withdrawal payment.Significantly, the relevant life takes advantage of a potentially higherwithdrawal percent value at an earlier age because of the deferral bonuspercent, as compared to prior art annuity products which provide apredetermined withdrawal percent chart that is strictly age-based andwhich do not provide any incentives to defer the first withdrawalpayment.

The present invention comprises a data processing method foradministering a deferred variable annuity contract for a relevant life,the annuity contract having a payment base, a contract value andlifetime benefit payments, comprising the steps of: (i) calculating awithdrawal base; (ii) determining a withdrawal percent; and (iii)calculating a lifetime benefit payment wherein the lifetime benefitpayment is determined by the following formula:LBP withdrawal=(the Withdrawal Percent+a deferral bonus percent)×(aWithdrawal Base),

-   -   wherein the deferral bonus percent is a function of the number        of years deferred by the relevant life until taking a first        lifetime benefit payment.

It should be understood that as used herein the term “periodically”includes method steps that in certain aspects may only be performedonce. In other aspects, such “periodically” performed method steps maybe performed more than once as described herein.

The following definitions are given hereunder to better understand termsused in the specification.

“Relevant Life” or “Covered Life”: The term relevant life or coveredlife is the governing life for determination of the living benefitsprovided under this illustrative embodiment. Covered life (or relevantlife) may refer to any one or more of the following: an owner, jointowner, annuitant, joint annuitant, co-owner, co-annuitant orbeneficiary.“Withdrawal Base”: The withdrawal base is the amount used in oneembodiment of the present invention to determine the lifetime benefitpayment. Preferably, the withdrawal base may be equal to the amount ofthe original premium, the payment base value, the contract value, or thegreater of the payment base value and the contract value“Payment Base”: The payment base (PB) (or more accurately the paymentbase value) is the amount used in one embodiment of the presentinvention to determine the lifetime benefit payment and the ridercharge. In one embodiment of the present invention, the initial paymentbase value equals the initial premium.“Premium”: 100% of the dollar amount of the initial or subsequentpremium payments deposited into the contract before application of anysales charges or payment enhancements.“Withdrawal Request”: A request made by the relevant life to withdrawfunds during the “accumulation phase” of the contract. One type ofwithdrawal is a lifetime benefit payment. Any withdrawal that is inexcess of the lifetime benefit payment may: (i) decrease the contractvalue below the minimum contract value; (ii) decrease the payment basevalue; and (iii) decrease the guaranteed death benefit.“Lifetime Benefit Payment”: A benefit payment that is available untilthe death of the relevant life. The lifetime benefit payment may be paidyearly in one embodiment. The total lifetime benefit payment for theyear may also be distributed monthly, quarterly or any other definedperiod. Preferably, the lifetime benefit payment is only available ifthe covered life age is 60 (or other predetermined age) or older.Preferably, if the relevant life is age 59 (or other predetermined age)or younger, the LBP is equal to zero. Other age restrictions can also beutilized for the lifetime benefit payment. Preferably, in oneembodiment, the lifetime benefit payment is determined by the followingformula:LBP withdrawal=(a Withdrawal Percent+a deferral bonus percent)×(aWithdrawal Base);

-   -   wherein the deferral bonus percent is a function of the number        of years deferred by the relevant life until taking a first        lifetime benefit payment.        It should be understood that in other embodiments of the present        invention, other formulas may be utilized for determining the        lifetime benefit payment. It is important to note that, in        alternative embodiments, the maximum total withdrawal percent        for a given payout period is not established by any specific        formula, but rather is predetermined and is an arbitrary number.        “Contract Value”: The contract value (CV) is a numerical measure        of the relative worth of a variable annuity product during the        accumulation phase. The contract value is determined by adding        the amount of purchase payments made during the accumulation        phase, deducting management fees, deducting contract fees,        deducting optional rider fees and surrenders made by the owner,        and adjusting for the relative increase (or decrease) of the        investment option(s) chosen by the owner. It should be        understood that in other embodiments of the present invention,        other formulas may be utilized for determining the contract        value.        “Sub-account”: Variable account investments within the variable        annuity contract, such as mutual funds, stocks and bonds.        “Withdrawal”: Also known as “surrender”, a relevant life may        withdraw up to the contract value at any time.        “Death Benefit”: The death benefit provision guarantees that        upon the death of the relevant life a death benefit (DB) is paid        to a beneficiary named in the contract that is equal to the        greater of the guaranteed death benefit or the contract value as        of the date the annuity company receives due proof of death. It        should be understood that in other embodiments of the present        invention, other formulas may be utilized for determining the        guaranteed death benefit.        “Benefit Amount”: In one embodiment of the present invention,        the benefit amount is used to calculate the amount of the death        benefit. Preferably, the benefit amount is equal to the premium        payments minus any lifetime benefit payments or withdrawals.        “AMF”: Annual Maintenance Fee.

Annuity Commencement Date”: The annuity commencement date (ACD) is thedate upon which the contract enters the “annuitization phase”.

“Withdrawal Percent”: In one embodiment of the present invention, thewithdrawal percent (WP) is used to determine the amount of the lifetimebenefit payment. It should be understood that in other embodiments ofthe present invention, other formulas may be utilized for determiningthe lifetime benefit payment.“PB increase”: Payment Base increase“Step-Up”: An increase to the payment base value that is available ifthe contract value increases because of favorable performance of theunderlying investments. Preferably, the step-up is guaranteed at apredetermined percentage.“Partial Surrender”: Partial surrender means the gross amount of thepartial surrender and will include any applicable contingent deferredsales charges.“Covered Life Change”: Any contractual change before ACD, which causes achange in the covered life, will result in a reset in the benefitsprovided under the rider and allows the issuing company to impose thefund allocation restrictions.“Annuity Contract”: The term annuity contract means a set of rules andother data that are reflected in a computer processing system foroperations of the annuity product.“Issue Rules”: The issuance of a contract may be subject to establishedrequirements known as issue rules.“Deferral Bonus Percent”: The bonus a relevant life receives in additionto receiving the lifetime benefit payments. The relevant life isentitled to the deferral bonus percent if lifetime benefit payment(s)are deferred once the relevant life becomes eligible to receive lifetimebenefit payments. It is important to note, the deferral bonus percent isa function of the number of years deferred by the relevant life untiltaking a first lifetime benefit payment.

The following detailed illustrative embodiment(s) is presented toprovide a more complete understanding of the invention. The specifictechniques, systems, and operating structures set forth to illustratethe principles and practice of the invention may be embodied in a widevariety of sizes, shapes, forms and modes, some of which may be quitedifferent from those in the disclosed embodiment. Consequently, thespecific structural and functional details disclosed herein areexemplary. They are deemed to afford the best embodiment for purposes ofdisclosure; but should not be construed as limiting the scope of theinvention.

Covered Life in Single and Joint/Spousal Election(s)

The covered life, or relevant life, may have a single life election orjoint/spousal continuation election as described more fully herein.

Single Life Election:

If a natural owner, the covered life is the owner and the joint owner(if any) on the rider effective date. If a non-natural owner—the coveredlife is the annuitant on the rider effective date. All age-contingentbenefit provisions are based on the attained age of the oldest coveredlife.

Joint/Spousal Continuation Election:

If a natural owner, the covered life is both spouses (as defined byFederal Law). All age-contingent benefit provisions are based on theattained age of the youngest covered life.

Issue rules are set forth to provide a more complete understanding ofthis illustrative embodiment of the present invention. It should beunderstood by those skilled in the art that these issue rules are setforth for illustrative purposes only and that other rules may beutilized. Accordingly, the issue rules set forth below should not beconstrued as limiting the scope of the invention.

The issue rules may include a maximum issue age. The riders are notavailable if any covered life or annuitant is age 81 (or otherpredetermined age) or greater on the rider effective date. In anotherembodiment, the riders are not available if any covered life orannuitant is age 76 (or other predetermined age) or greater on the ridereffective date. The rider may be elected on contract issue orpost-issue.

Single Life Election: No Additional Requirements

Joint/Spousal Continuation Election. (This may also includeco-annuitants)

One of the following must apply:

-   -   If a natural owner purchases Joint/Spousal election, and adds a        spousal joint owner, then the owner can name anyone else as the        designated beneficiary, because by contract disposition, the        joint owner will receive the death benefit.    -   If a natural owner purchases joint/spousal election, and does        not add a joint owner, then the owner must name their spouse as        the designated beneficiary.    -   If a non-natural owner purchases joint/spousal election, then        the annuitant's spouse must be the designated beneficiary.    -   A joint owner who is not the owner's spouse is not allowed.        Calculation of the Withdrawal Percent (WP)

The Withdrawal Percent (WP) is used to determine the amount of thelifetime benefit payment. There are two types of withdrawal percents:(i) the predetermined withdrawal percent (shown below); and (ii) thewithdrawal percent elected by the relevant life during each given year.

The WP is determined at the later of; (i) the attained age of thecovered life on the most recent contract anniversary prior to the firstwithdrawal, or (ii) the contract anniversary immediately following thecovered life's 60^(th) birthday (or other predetermined age).

Single Life Election:

(Note: the Following Percentages and Ages, if Ages are in Fact Used, canVary)

5.0% for attained ages 60 to 64;

5.5% for attained ages 65 to 69;

6.0% for attained ages 70 to 74;

6.5% for attained ages 75 to 79; and

7.0% for attained ages 80 and above.

Joint/Spousal Continuation Election:

4.5% for attained ages 60 to 64;

5.0% for attained ages 65 to 69;

5.5% for attained ages 70 to 74;

6.0% for attained ages 75 to 79; and

6.5% for attained ages 80 and above.

Calculation of the Payment Base (PB)

The Payment Base (PB) (or more accurately payment base value) is theamount used to determine the lifetime benefit payment (LBP) and therider charge.

A total partial surrender amount in a contract year that exceeds the LBPby not more than $0.12 (tile tolerance amount) will be deemed not morethan the LBP. This provision recognizes that owners may take the LBP ininstallments over the year, and the amount of installment may round theproportional distribution amount to the higher cent. Therefore, ownersintended to stay within the LBP may exceed it by only a few cents. Themaximum PB is $5,000,000.

If this rider is effective on the contract issue date, then the PBequals the X of the initial premium. If this rider is effective afterthe contract issue date, then the PB equals 100% of the dollar amount ofthe contract value on the rider effective date, less any paymentenhancements received in the last twelve months.

When subsequent premium payments are received, the PB will be increasedby 100% of the dollar amount of the subsequent premium payment. Whenevera partial surrender is made prior to the contract anniversaryimmediately following the covered life's 60^(th) birthday (or otherpredetermined age), the payment base is reduced for an adjustmentdefined below.

“Threshold” definition: 5% single/4.5% joint/spousal multiplied by thegreater of the payment base or contract value at the beginning of thecontract year plus subsequent premiums prior to a partial surrender.

For cumulative partial surrenders during each contract year that areequal to or less than the threshold, the adjustment is equal to thedollar amount of the partial surrender.

For any partial surrender that first causes cumulative partialsurrenders during the contract year to exceed the threshold, theadjustment is the dollar amount of the partial surrender that does notexceed the threshold. For the portion of the withdrawal that exceeds thethreshold, the adjustment is a factor. The factor is as follows:1−(A/(B−C))where

-   -   A=partial surrenders during the contract year in excess of the        threshold;    -   B=contract value immediately prior to the partial surrender; and    -   C=the threshold, less any prior partial surrenders during the        contract year. If C results in a negative number, C becomes        zero.

For partial surrenders during each contract year, where the sum of priorpartial surrenders are in excess of the threshold, the adjustment is afactor. The factor is applied to the payment base immediately before thesurrender. The factor is as follows:1−(A/B)where

-   -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.

Whenever a partial surrender is made on or after the contractanniversary immediately following the covered life's 60^(th) birthday(or other predetermined age), the PB will be equal to the amountdetermined as follows:

If the total partial surrenders since the most recent contractanniversary are equal to or less than the current lifetime benefitpayment (LBP), the PB is not reduced by the amount of the partialsurrender.

If the total partial surrenders since most recent contract anniversaryare more than the current LBP, but all partial surrenders were paidunder the Automatic Income Required Minimum Distribution (AI RMD), thePB is not reduced by the amount of partial surrender.

For any partial surrender that first causes cumulative partialsurrenders during the contract year to exceed the current LBP and theRMD exception above does not apply the adjustment is a factor. Thefactor is as follows:1−(A/(B−C))where

-   -   A=partial surrenders during the contract year in excess of the        LBP;    -   B=contract value immediately prior to the partial surrender; and    -   C=the LBP, less any prior partial surrenders during the contract        year. If C results in a negative number, C becomes zero.

For additional partial surrender(s) in a contract year, where the sum ofall prior partial surrenders exceed the current LBP, the PB will bereduced by applying a factor. The factor is as follows:1−(A/B)where

-   -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.        Benefit Increase Provision

In one embodiment, the withdrawal percent will be set at the attainedage of the first withdrawal and will not increase thereafter. In anotherembodiment, the benefit increase is facilitated through an increase inthe payment base.

On every contract anniversary up to and including the contractanniversary immediately following the covered life's 80^(th) birthday(or other predetermined age), it will be automatically determined as towhether an increase in the PB is applicable. If an increase isapplicable, the PB will automatically increase by the factor below,subject to a minimum of zero and a maximum of 10% (note: the percentagecould change or it could be a full step up (no limit)):(contract value prior to rider charge taken on currentanniversary/maximum contract value)−1

where maximum contract value equals the greater of (A) or (B) below:

-   -   (A) the contract value on the rider effective date, plus        premiums received after the rider effective date;    -   (B) the contract value on each subsequent contract anniversary,        excluding the current contract anniversary plus premiums        received after the contract anniversary date. (Similar to MAV        except that there is no adjustment for withdrawals.)

The WP is locked in on the date of the first withdrawal.

Calculation of the Lifetime Benefit Payment

The LBP is available until the death of any covered life or until thewithdrawal benefit is revoked.

A total partial surrender amount in a contract year that exceeds the LBPby not more than $0.12 (the tolerance amount) will be deemed not morethan the LBP. This provision recognizes that owners may take the LBP ininstallments over the year, and the amount of installment may round theproportional distribution amount to the higher cent. Therefore, ownersintended to stay within the LBP may exceed it by only a few cents.

On the Rider effective date, the following applies to the calculation ofthe LBP.

-   -   If the covered life is Age 60 (or other predetermined age) or        older on the rider effective date, the LBP is equal to the        payment base multiplied by the WP as provided by the        predetermined withdrawal percent chart.    -   If the covered life is Age 59 (or other predetermined age) or        younger on the rider effective date, the LBP is equal to zero.

On any contract anniversary immediately following the covered life's60^(th) birthday (or other predetermined age), the following applies tothe calculation of the LBP:

The LBP is equal to the (WP+the deferral bonus percent) multiplied bythe withdrawal base. The withdrawal base may be equal to the originalpremium, the payment base, the contract value, or the greater of thepayment base or the contract value on the anniversary for thetime-based, the age-based and the market-based riders, single andspousal. The LBP can fluctuate year to year due to market performance,but will never be lower than the (WP+the deferral bonus percent)multiplied by the PB as long as the covered life has reached the age of60 (or other predetermined age). Also, if the account value on theanniversary exceeds the PB, the LBP may decrease in future years butwill never be less than the PB multiplied by the (WP+the deferral bonuspercent).

When a subsequent premium payment is made after the contract anniversaryimmediately following the covered life's 60^(th) birthday (or otherpredetermined age), the LBP is equal to the greater of: (i) the (WP+thedeferral percent bonus percent), on the most recent contractanniversary, multiplied by the greater of the PB or contract valueimmediately after the subsequent premium is received, or (ii) the priorLBP.

-   -   Whenever a partial surrender is made on or after the contract        anniversary immediately following the covered life's 60^(th)        birthday (or other predetermined age):

If the PB is 0 (zero) due to withdrawals, the LBP is equal to 0 (zero).During the deferral stage, subsequent premiums may be made tore-establish the PB and the LBP.

-   -   The LBP will be equal to the amount determined in either one as        follows:    -   If the total partial surrenders since the most recent contract        anniversary are equal to or less than the current lifetime        benefit payment (LBP), the LBP is equal to the LBP immediately        prior to the partial surrender.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP, but all partial        surrenders were paid under the Automatic Income Required Minimum        Distribution (AI RMD), the provisions of above will apply.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP and the AI RMD        exception in above does not apply, the LBP is reset to the        (WP+the deferral bonus percent) on the most recent contract        anniversary multiplied by the greater of the PB or contract        value immediately after the partial surrender.

The contract owner may request an amount less than, equal to, or greaterthan the lifetime benefit payment. Total partial surrenders taken duringa contract year on or after the contract anniversary immediatelyfollowing the covered life's 60^(th) birthday (or other predeterminedage) which exceed the LBP may reduce future LBP values and may reducethe PB. If the total amount requested by the contract owner during acontract year is less than the lifetime benefit payment, the excesscannot be carried over to increase future years' lifetime benefitpayments.

Contingent Deferred Sales Charge (CDSC)—Free Up to the Amount of the LBP

If the LBP exceeds the actual withdrawal amount (AWA) on the most recentcontract anniversary, any contingent deferred sales charge (CDSC) willbe waived up to the LBP amount.

Death Benefit Before Annuity Commencement Date

For both single and joint/spousal election, a death benefit may beavailable on the death of any owner or annuitant. For joint/spousalelection only, no death benefit will be available when a covered life isthe beneficiary, and the beneficiary dies. The death benefit provisionguarantees that upon death a death benefit (DB) will be paid equal tothe greater of the death benefit or the contract value as of the dateproof of death is received. The rider charge is not assessed on death.

When proof of death is processed, the contract will go into suspensemode. No charges will apply during that period. The amount available tobe paid as a death benefit under the terms of the rider is a return ofpremium adjusted for subsequent premium payments and partial surrenders.

At rider effective date:

-   -   If the rider is effective on the contract issue date, then the        DB equals the initial premium.    -   If the rider is effective after the contract issue date, then        the DB equals 100% of the dollar amount of the contract value on        the rider effective date, less any bonus payments paid into the        contract by the company in the last 12 months.

When a subsequent premium payment is received, the DB will be increasedby 100% of the dollar amount of the subsequent premium payment. If thewithdrawal feature is revoked, all future withdrawals from the deathbenefit will be fully proportional as of the date it is revoked.

Whenever a partial surrender is made prior to the contract anniversaryimmediately following the covered life's 60^(th) birthday (or otherpredetermined age), the death benefit is reduced for an adjustmentdefined below.

“Threshold” definition: see definition described in the section entitled“Calculation of the Payment Base” supra.

For cumulative partial surrenders during each contract year that areequal to or less than the threshold, the adjustment is the dollar amountof the partial surrender. For any partial surrender that first causescumulative partial surrenders during the contract year to exceed thethreshold, the adjustment is the dollar amount of the partial surrenderthat does not exceed the threshold, and the adjustment for the remainingportion of the partial surrender is a factor. The factor is applied tothe portion of the death benefit that exceeds the threshold. The factoris as follows:1−(A/(B−C))where

-   -   A=partial surrenders during the contract year in excess of the        threshold;    -   B=contract value immediately prior to the partial surrender; and    -   C=the threshold less any prior partial surrenders during the        contract year. If C results in a negative number, C becomes        zero.

For partial surrenders during each contract year, where the sum of theprior partial surrenders in the year that are in excess of thethreshold, the adjustment is a factor. The factor is applied to theadjusted death benefit immediately before the surrender. The factor isas follows:1−(A/B)where

-   -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.

Whenever a partial surrender is made on or after the contractanniversary immediately following the covered life's 60^(th) birthday(or other predetermined age), the DB will be equal to the amountdetermined as follows:

-   -   If the total partial surrenders since the most recent contract        anniversary are equal to or less than the current lifetime        benefit payment (LBP), the DB becomes the DB immediately prior        to the partial surrender, less the amount of partial surrender,        less the amount of partial surrender paid out of the general        account of the company.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP, but all partial        surrenders were paid under the Automatic Income RMD (AI RMD),        the DB becomes the DB immediately prior to the partial        surrender, less the amount of partial surrender, less the amount        of partial surrender paid out of the general account of the        company.    -   If the total partial surrenders since the most recent contract        anniversary exceed the total current LBP and the AI RMD        exception does not apply, the adjustment is the dollar amount of        the partial surrender that does not exceed the LBP, and the        adjustment for the remaining portion of the partial surrender is        a factor. The factor for is applied to the portion of the Death        benefit that exceeds the LBP. The factor is as follows:        1−(A/(B−C))        where    -   A=partial surrenders during the contract year in excess of the        LBP;    -   B=contract value immediately prior to the partial surrender.    -   C=LBP less any prior partial surrenders during the contract        year. If C results in a negative number, C=0 (zero).

For partial surrenders during each contract year, where the sum of theprior partial surrenders in the year that are in excess of the currentLBP, the adjustment is a factor. The factor for adjustments for partialsurrenders for the DB is applied to the adjusted DB immediately beforethe surrender. The factor is as follows:1−(A/B)where

-   -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.        Contract Value (CV) Reduces Below Minimum Account Rules

The minimum contract value rules are an optional feature of the presentinvention and do not apply to the preferred embodiments. If the minimumcontract value rules are selected to be applied, then the followingrules are used. The minimum contract value (MCV) is defined as 20% orother predetermined percentage of the payment base on the date of awithdrawal request. Lifetime benefit payments cannot reduce the contractvalue below this minimum threshold. Only sub-account performance andwithdrawals in excess of the LBP can decrease the contract value belowthe MCV.

-   -   If total partial surrenders since the most recent contract        anniversary are less than or equal to the difference between the        contract value and the MCV, the contract value will be reduced        by the total partial surrender.    -   If the contract Value at the time of a partial surrender is less        than or equal to the MCV, the contract value will not be        decreased for the partial surrender. The requested partial        surrender will be paid out of the general account assets of the        company.    -   If the contract value immediately before the partial surrender        is greater than the MCV, but would drop below the MCV after the        partial surrender, the contract value will be liquidated to pay        the LBP only to the extent it would equal the MCV. The remaining        portion of the LBP that is not funded by the contract value will        be paid out of the general account assets of the company.        Covered Life Change(s)—Single Life Elections

Any contractual change before the annuity commencement date (ACD) whichcauses a change in the covered life will result in a reset in thebenefits provided under the rider, and fund allocation restrictions maybe imposed.

Covered life changes in the first 6 months of the contract issue date(or other time period) will not cause a change in the DB or PB. However,the WP and LBP may change based on the attained age of the oldestcovered life after the covered life change.

-   -   If the covered life is changed and a withdrawal has been taken,        both within the first 6 months from contract issue date (or        other time period), then the LBP and WP will be calculated at        the time of the covered life change and will be based on the new        covered life's attained age on the rider effective date.    -   If the covered life is changed and a withdrawal has not been        taken, both within the first 6 months from contract issue date        (or other time period), then the LBP and WP will be calculated        upon the first withdrawal.    -   If the first withdrawal is after the first 6 months and before        the first contract anniversary (or other time period), then the        LBP and WP will be based on the new covered life's attained age        on the rider effective date.    -   If the first withdrawal occurs after the first contract        anniversary, then the LBP and WP will be calculated based on the        new covered life's attained age on the most recently attained        contract anniversary.    -   If the oldest covered life after the change is greater than the        age limitation of the rider at the time of the change, then the        rider will terminate, and the death benefit will be equal to        contract value.        Covered Life Changes—Single Life Election:

Covered life changes after the first 6 months of contract issue datewill cause a reset in the benefits. If the oldest covered life after thechange is equal to or less than age limitation of the rider at the timeof the change, then either below will automatically apply.

-   -   If the rider is not currently available for sale, the withdrawal        feature of the rider will be revoked.        -   The existing rider will continue with respect to the death            benefit only (i.e., the withdrawal feature will terminate).            The rider fee will terminate.        -   The death benefit will be recalculated to the lesser of            contract value or the DB on the effective date of the            covered life change.        -   The rider charge is assessed on the revocation date, and            then will no longer be assessed.    -   If the rider is currently available for sale, the existing rider        will continue with respect to all benefits, at the current        contract rider fee.        -   The PB amount will be reset to the minimum of the contract            value or the PB on the date of the change.        -   The DB will be reset to the minimum of the contract value or            the DB on the date of the change.        -   The WP and LBP will be recalculated on the date of the            change, and will be based upon the following.            -   A. If withdrawals are taken prior to the first contract                anniversary, the new covered life's attained age will be                imposed on the rider effective date.            -   B. If withdrawals are taken after the first contract                anniversary, the new covered life's attained age will be                imposed on the contract anniversary prior to the first                withdrawal.        -   The maximum contract value will be recalculated to equal the            contract value on the date of the covered life change.

If the oldest covered life after the change is greater than the agelimitation of the rider at the time of the change, the rider willterminate, and the DB will be equal to the contract value. If the rideris no longer available for sale and the issue age of the rider (to bedetermined on a non-discriminatory basis) has been changed, and acovered life change occurs, and they exceed that newly determined agelimitation, then rider will terminate, and the death benefit will beequal to contract value.

Covered Life Change(s)—Joint Life Elections

Covered life changes after the first 6 months of contract issue date, ifowner and owner's spouse are no longer married, for reasons other thandeath, then covered life changes may occur as follows:

If surrenders have not been taken from the contract, then the PB, the DBand the MCV remain the same; covered life will be reset and the WP scalewill be based on the youngest covered life as of the date of the change.

If surrenders have not been taken from the contract, the followingcovered life changes may occur.

-   -   Remove spouse as covered life.    -   Remove spouse as a covered life and replace original spouse with        new spouse.

If surrenders have been taken from the contract:

-   -   Remove spouse as covered life.    -   The covered life will be reset and the WP scale will be based on        the youngest covered life.

If surrenders have been taken from the contract, then the followingcovered life changes occur.

-   -   Remove spouse as covered life.    -   The PB, the DB and the MCV remain the same.    -   The WP scale will be based on the attained age of the remaining        covered life as of the date of the change.    -   Any changes other than removing the spouse will follow the rules        of below.

If the oldest covered life after the change is greater than (older) tothe age limitation of the rider at the time of the change, then therider will terminate. The death benefit will be equal to contract value.

If any other contractual change causes a change in the covered life,then either will automatically apply:

-   -   If the oldest covered life after the change is equal to or less        than (younger) the age limitation of the rider at the time of        the change, then the withdrawal feature of this rider will be        revoked. The existing rider will continue with respect to the        death benefit only. The rider charge is assessed on revocation        date, and then will no longer be assessed.    -   If the oldest covered life after the change is greater than        (older) the age limitation of the rider at the time of the        change, then the rider will terminate. The death benefit will be        equal to contract value. If the rider is no longer available for        sale and the issue age of the rider has been changed (to be        determined on a non-discriminatory basis), and a covered life        change occurs, and they exceed that newly determined age        limitation, then rider will terminate, and the death benefit        will be equal to contract value.    -   If the spouse dies and is the primary beneficiary and the        covered life, then the owner may remove them from the contract.        The PB, DB and MCV will remain the same. The WP will be        recalculated as follows: If there has been a partial surrender        since the rider effective date, then WP will remain at the        current percentage.    -   If there has not been a partial surrender since the rider        effective date, then WP will be based on the attained age of the        remaining covered life on the contract anniversary prior to the        first surrender.        Spousal Continuation        Single Life Election:

In the event the contract owner dies and spousal continuation iselected, the contract value will increase to the DB value (the greaterof the contract value and the DB). The covered life will bere-determined on the date of the continuation. If the covered life isless than age 81 (or other predetermined age) at the time of thecontinuation, then either of the following will automatically apply:

-   -   If the rider is not currently available for sale, the withdrawal        feature of the rider will be revoked. The existing rider will        continue with respect to the death benefit only (i.e., the        withdrawal feature will terminate). The rider charge is not        assessed on the revocation date, and then no longer assessed.    -   If the rider is currently available for sale, the existing rider        will continue with respect to all benefits at the current        contract rider charge. The payment base and the death benefit        will be set equal to the contract value on the continuation        date. The LBP and WP will be recalculated on the continuation        date. The WP will be recalculated based on the age of the oldest        covered life on the effective date of the spousal continuation.        If the WP had previously been locked in, then it will become        unlocked and can change based on the next withdrawal. The        maximum contract value will be set to contract value on the        continuation date.

If the covered life is greater than or equal to 81 (or otherpredetermined age) at the time of the continuation, the rider willterminate. The death benefit will be equal to the contract value.

Joint/Spousal Continuation Election

In the event that the contract owner dies and spousal continuation iselected, the contract value will be increased to the DB value (thegreater of the contract value and the DB). The spouse may do thefollowing.

Continue the Contract and the Rider.

The existing rider will be continued with respect to all benefits, atthe current contract rider charge. The payment base will be equal to thegreater of contract value or payment base on the continuation date. TheLBP will be recalculated to equal the withdrawal percent multiplied bythe greater of either the contract value or the payment base on thecontinuation date. The maximum contract value will be the greater ofeither the payment base or the contract value on the continuation date.The DB will be equal to the bumped up contract value on the continuationdate.

The WP Recalculation Rule:

-   -   The WP will remain at the current percentage if there has been a        partial surrender since the rider effective date.    -   If there has not been a partial surrender, the WP will be based        on the attained age of the remaining covered life on the        contract anniversary prior to the first surrender/withdrawal.        The contract owner cannot name a new owner on the contract. The        contract owner can name a new beneficiary on the contract. Any        new beneficiary added to the contract will not be taken into        consideration as a covered life. The rider will terminate upon        the death of the surviving covered life.

Continue the Contract and Revoke the Withdrawal Feature of the Rider.

The charge is assessed on revocation date, and then no longer assessed.The covered life will be re-determined on the date of the continuationdate for death benefit purposes. If the covered life is greater than theage limitation at the time of continuation, the rider will terminate.The death benefit will be equal to contract value.

Effect of Death of the Owner or the Annuitant Before the AnnuityCommencement Date

The following tables describe the effect of the death of the owner orannuitant before the annuity commencement date.

TABLE 1 Single Life Election If the Deceased is And . . . And . . . Thenthe . . . Contract There is a The annuitant is living or Joint contractowner Owner surviving deceased receives the DB, Rider contract ownerterminates Contract There is no The annuitant is living or Riderterminates Owner surviving deceased Designated Beneficiary ContractOwner receives DB Contract There is no The annuitant is living or Riderterminates Owner surviving deceased Estate receives DB Contract Owner orBeneficiary Annuitant Contract Owner There is no contingent Contractcontinues, no is living annuitant and the DB is paid, Rider contractowner becomes continues the contingent annuitant Annuitant ContractOwner There is no contingent Rider terminates, is living annuitant andthe contract owner receives contract owner waives DB their right becomethe contingent annuitant Annuitant Contract Owner contingent annuitantis Contingent annuitant is living living becomes annuitant and thecontract and Rider continues Annuitant Contract Owner There is nocontingent Contract owner is non-natural annuitant receives DB, Riderperson terminatesContingent Annuitant Becomes Annuitant

If the annuitant dies where there is a contingent annuitant (who isdifferent from the owner/annuitant), then the rider continues and allprovisions of the rider remain the same, there are no resets nor DBspaid. Upon the death of the last surviving covered life, a DB is paid tothe beneficiary, and the rider terminates.

If the Deceased is And . . . And . . . Then the . . . Contract There isa The annuitant is living The surviving contract Owner survivingcontract or deceased owner continues the owner contract and rider, thecontract value will be increased to the death benefit value. ContractThere is no The annuitant is living If the spouse is the sole Ownersurviving contract or deceased primary beneficiary, owner follow spousalcontinuation rules for joint life elections Contract There is no Theannuitant is living Rider terminates Owner surviving contract ordeceased Estate receives DB owner or beneficiary Annuitant Contractowner is If the spouse is the sole non-natural primary beneficiary,person follow spousal continuation rules for joint life electionsAnnuitant The owner is There is a living The rider continues; livingcontingent annuitant upon the death of the last surviving Covered Life,the rider will terminate.Effect of Death after the Annuity Commencement Date.

The following table describes the effect of death after the annuitycommencement date.

TABLE 3 Single Life Election If the Deceased is And . . . And . . . Thenthe . . . Annuitant The annuitant is Fixed Lifetime The lifetime alsothe contract and Period contingency ceases. owner Certain is Theremaining DB is elected paid under Period Certain.

TABLE 4 Joint/Spousal Continuation Election If the Deceased is And . . .And . . . Then the . . . Annuitant The annuitant is also Fixed LifetimeThe lifetime the contract owner, and Period benefit ceases. and there isno Certain is The remaining surviving Joint elected DB is paid underAnnuitant Period Certain. Annuitant The annuitant is also Fixed Jointand Lifetime Benefit the contract owner, Survivor Lifetime continuesuntil and there is a and Period death of last surviving Joint Certainsurviving Annuitant is elected annuitantFund Allocation Restrictions

The right to restrict investment is reserved in any investment option inthe case of a change of covered life after six months. If the investmentoption restriction is imposed, the contract owner has the followingoptions.

-   -   Reallocate all existing money and all new premium to a        nonrestricted investment option, an available asset allocation        program, or fund-of-fund investment option as may be offered        from time to time.    -   Revoke the Withdrawal Feature        If the restrictions are violated, the withdrawal feature will be        revoked. The Death Benefit continues as is upon the date of        revocation.        Aggregation

For purposes of determining the PB under the rider, the right isreserved to treat one or more deferred variable annuity contracts issuedwith the rider attached in the same calendar year as one contract. Ifthe contracts are aggregated, the period will changed over whichwithdrawals are measured against the benefit payment.

The effective date of the election will be treated until the end of thecalendar year as a contract year for the purposes of the LBP limit. Apro rata rider charge will be taken at the end of that calendar year. Aslong as total withdrawals in that period do not exceed the LBP, thewithdrawals will not necessitate a reset.

In future calendar years, the LBP limits will be aggregated and will beon a calendar year basis. In other words, withdrawals under allaggregated contracts in a calendar year will be compared against thecombined LBP limits for the aggregated contracts. If withdrawals exceedthose combined limits, the aggregate PB will be set to the combinedcontract values of the aggregated contracts. The LBP will then equalwithdrawal percent multiplied by the new PB.

If withdrawals do not exceed those combined limits, each withdrawal willreduce the PB dollar for dollar. The withdrawal benefits relating to thecontract value reaching zero will not apply until the contract value ofall aggregated contracts reaches zero.

The rider charge will be taken at the end of each calendar year. It willbe deducted pro rata from all of the sub-accounts and fixed accounts ofthe aggregated contracts. If the contract values of all aggregatedcontracts are reduced below the minimum account rules in effect, theannuity options will be offered as defined earlier in thisspecification. The options will pay the combined LBP.

Annuity Commencement Date

If the annuity reaches the maximum ACD, which is the later of the10^(th) contract anniversary and the date the annuitant reaches age 90,the contract must be annuitized unless it is agreed upon to extend theACD. In this circumstance, the contract may be annuitized under standardannuitization rules, but under no circumstances will the amount payablebe less than your LBP, provided that the certain period does not exceedthe Death Benefit remaining at the ACD divided by the LBP.

Single Life Election:

The provider will issue the insured a fixed lifetime and period certainpayout. The lifetime portion will be based on the Covered Lifedetermined at ACD. The Covered Life is the Annuitant for this payoutoption. If there is more than one Covered Life, then the lifetimeportion will be based on both Covered Lives. The Covered Lives will bethe Annuitant and Joint Annuitant for this payout option. The lifetimeportion will terminate on the first death of the two. The minimum amountpaid to owner under this Annuity Option will at least equal theremaining DB under this rider.

If the oldest Annuitant is age 59 (or other predetermined age) oryounger, the date the payments begin will be automatically deferreduntil the oldest Annuitant attains age 60 (or other predetermined age)and is eligible to receive payments in a fixed dollar amount until thelater of the death of any Annuitant or a minimum number of years.

If the Annuitant(s) are alive and at the age of 60 (or otherpredetermined age) or older, payments will be received in a fixed dollaramount until the later of the death of any Annuitant or a minimum numberof years. The minimum number of years that payments will be made isequal to the remaining DB under this rider divided by the product of thepayment base on the ACD multiplied by the greater of the WP and 5%Single (41/2% Spousal).

${Single}\mspace{14mu}{Election}\text{:}\mspace{14mu}\frac{DB}{{PBxMax}\left( {{WP},{5\%}} \right)}$${Joint}\text{/}{Spousal}\mspace{14mu}{Election}\text{:}\mspace{14mu}\frac{DB}{{PBxmax}\left( {{WP},{4\frac{1}{2}\%}} \right)}$This annualized amount will be paid over the greater of the minimumnumber of years, or until the death of any Annuitant, in the frequencythat is elected. The frequencies will be among those offered at thattime but will be no less frequently than annually. If, at the death ofany Annuitant, payments have been made for less than the minimum numberof years, the remaining scheduled period certain payments will be madeto the beneficiary. A lump sum option is not available.Joint/Spousal Continuation Election:

The minimum amount paid to owner under this Annuity Option will at leastequal the DB under this rider. If the younger Annuitant is alive and atthe age of 59 (or other predetermined age) or younger, the date thatpayments begin will be automatically deferred until the youngerAnnuitant attains age 60 (or other predetermined age) and is eligible toreceive payments in a fixed dollar amount until the death of the lastsurviving Annuitant or a minimum number of years.

If the Annuitants are alive and the younger Annuitant is at the age of60 or older (or other predetermined age), payments will be received in afixed dollar amount until the death of the last surviving Annuitant or aminimum number of years. The minimum number of years that payments willbe made is equal to the remaining DB under this rider divided by the LBPat annuitization. This annualized amount will be paid over the greaterof the minimum number of years, or until the death of the last survivingAnnuitant, in the frequency that is elected. The frequencies will beamong those offered at that time but will be no less frequently thanannually. If, at the death of the last surviving Annuitant, paymentshave been made for less than the minimum number of years, the remainingscheduled period certain payments will be made to the Beneficiary. Alump sum option is not available. If both spouses are alive, owner willbe issued a Fixed Joint & Survivor Lifetime and Period Certain Payout.The Covered Life and Covered Life's spouse will be the Annuitant andJoint Annuitant for this payout option. The lifetime benefit willterminate on the last death of the two. If one spouse is alive, ownerwill be issued a Fixed Lifetime and Period Certain Payout. The lifetimeportion will be based on the Covered Life. The Covered Life is theAnnuitant for this payout option. The lifetime benefit will terminate onthe last death of the Covered Life.

Premium Restrictions

Prior company approval is required on all subsequent premium paymentsreceived after the first 12 months. The approval rules are as follows.

-   -   Any subsequent premium(s) will not be accepted if it brings the        total cumulative subsequent premiums in excess of $100,000        without prior approval.        Revoking the Withdrawal Feature

In one embodiment, at any time following the earlier of spousalcontinuation or the fifth anniversary of the rider effective date, thecontract owner may elect to revoke the withdrawal feature of the rider.The payment base will go to zero and the withdrawal percent will go tozero, and LBP will go to zero.

On the date the withdrawal feature is revoked, a pro rata share of therider charge is equal to the rider charge percentage multiplied by thePB, multiplied by the number days since the last charge was assessed,divided by 365. The rider charge will be assessed on revocation date,and then will no longer be assessed. The death benefit continues as isupon the date of the revocation. No other living benefit may be electedupon the revocation of the withdrawal feature.

In another embodiment, the contract owner can not elect to revoke thewithdrawal feature. The withdrawal feature can be revoked in certaincircumstances.

Additional Annuity Contract(s) Rules

Additional terms of the contract(s) or rider(s) include the following.The benefits under the contract cannot be assigned. If the free lookprovision under the contract is exercised, the rider will terminate.

Subject to state approval, a rider will be made available on allcurrently available products issued on or after the date the rider islaunched for sale in the state of issue. This does not imply post-issueelection. Post-issue election will be determined on an as needed basis.See product requirements for a complete list.

If the rider effective date is after the contract issue date, then theperiod between the rider effective date and the next contractanniversary will constitute a contract year.

The employee gross-up is not considered premium for purposes of thepayment base and death benefit. Payment enhancements are not consideredpremium for purposes of the payment base and death benefit. Front-endloads are not taken from the premium for purposes of the payment baseand death benefit.

Turning now to the figures, FIG. 1 illustrates the manner in which a newannuity contract application is processed. The new applicationprocessing routine starts (block 102) when an application is completed.The annuity contract application and initial premium are received by theinsurance company (block 104). The annuity contract is then establishedthrough the contract establishing routine (block 106) as furtherdescribed in FIG. 2. After the annuity contract is established, theaccount value is then set up through the account value set routine(block 108), via the computer systems, as further specified in FIG. 3.Thereafter customer communication is established through the customercommunication routine (block 110) as further specified in FIG. 4. Theapplication processing routine ends at (block 112).

FIG. 2 is a flow chart that illustrates in more detail the manner inwhich an annuity contract is established. The annuity contractestablishing routine starts at (block 202). After receiving the annuitycontract application, customer demographics are determined (block 204).The customer demographics and other data from the annuity contractapplication are transmitted to the insurance company by any suitablemeans, such as electronic transmission, facsimile transmission,telephonic transmission, and the like. The customer demographics may bescanned in or electronically entered into the computer system by theinsurance company after the demographic data is determined. Suchdemographic information may include age, gender, date of birth, socialsecurity number, address, marital status, and the like. The customerdemographics may be used for a variety of purposes, such asidentification purposes or to locate a relevant life by searchinghis/her social security number. The customer demographics are also usedwhen determining and/or calculating a variety of factors that arerelated to the annuity contract, such as benefit amount calculations,tax considerations, and the like. The types of customer demographicsthat are determined are generally related to the type of annuitycontract application that is filled out by the relevant life. Thespecific product election is determined (block 206). For example, thespecific product may be elected from a group of different variableannuity products, which each have different characteristics includingthe costs and fees as well as the liquidity features associatedtherewith. The election of optional riders is determined (block 208).For example, the optional riders may be elected from a group ofdifferent riders, which each have various guaranteed withdrawalfeatures. The election of investment options is determined (block 210).For example, the investment options include money market funds, bondfunds, stock funds, and the like. The beneficiary is elected (block212). In one aspect, this is the person who will collect the deathbenefits, if any. The source of the premium is determined (block 214).For example, the source of the premium may come from the relevant life'spersonal funds or may come from another annuity in the form of atransfer. It should be understood that the steps taken for establishingthe contract may proceed in various orders and that the order shown inFIG. 2 is for illustrative purposes only and is only one embodiment ofsaid steps. The contract establishing routine ends at (block 216).

FIG. 3 is a flow chart that illustrates in more detail the manner inwhich an account value is set up. The account value set up routinestarts at (block 302). The funds are received (block 304). For example,the funds may be received via electronic transfer from a bank account orfrom another variable annuity holder. The funds are then allocated basedon investment elections (block 306). For example, the allocations can beaccomplished through a computerized system according to the investmentelections by the relevant life. Unit values are established for theannuity contract (block 308). For example, based on the performance ofthe underlying investment elections, unit values are established,preferably on a daily basis, for use in determining the resulting impacton the relevant life's annuity contract based on their specific fundallocations. For example the number of units that are applied to eachannuity contract is different for each relevant life based on the numberof units held within the annuity contract. It should be understood thatthe steps taken for setting LIP the account value may proceed in variousorders and that the order shown in FIG. 3 is for illustrative purposesonly and is only one embodiment of said steps. The account value set uproutine ends at (block 310).

FIG. 4 is a flow chart that illustrates in more detail the manner inwhich customer communication is established. The customer communicationroutine starts at (block 402). Communications with the customer may beaccomplished via email, facsimile, letter, telephone, and the like.Communication with the customer in one aspect relates to the issuing ofthe contract (block 404). Communication with the customer in one aspectrelates to the relevant confirmation of the previous contract issuancecommunication (block 406). Any regulatory-imposed communication with theclient is accomplished (block 408). It should be understood that thesteps taken for establishing customer communication may proceed invarious orders and that the order shown in FIG. 4 is for illustrativepurposes only and is only one embodiment of said steps. The customercommunication routine ends at (block 410).

FIG. 5 is a flow chart illustrating the appropriate steps after awithdrawal is requested. The withdrawal processing routine starts at(block 502). A withdrawal is first requested by the relevant life at(block 504). The withdrawal is then processed according to the contractrules (block 506). The contract rules are embedded in a computer systemor the like and vary according to the type of annuity contract. Forexample, in certain embodiments, a requested withdrawal amount by therelevant life may be limited by the contract rules to a specificwithdrawal percent that is applied by the computer system, and whereinthe contract rules specify the withdrawal percent according to the ageof the relevant life or the number of years since the contract wasestablished. Therefore, the contract rules govern the data flow in thecomputer system. The contract rules are administratively built into thecomputer system to obviate the need for manual intervention by theinsurance company. The account value is reduced according to thecontract rules (block 508). The death benefit is reduced according tothe contract rules (block 510). The withdrawal benefit is adjustedaccording to the contract rules (block 512). The check or other form ofpayment is issued (block 516). The appropriate tax forms are generatedat year end (block 518). It should be understood that the steps takenfor processing withdrawals may proceed in various orders and that theorder shown in FIG. 5 is for illustrative purposes only and is only oneembodiment of said steps. The withdrawal processing routine ends at(block 520).

FIG. 6 is a flow chart illustrating a preferred embodiment of thepresent invention comprising a data processing method for administeringa deferred variable annuity contract for a relevant life. It should beunderstood that the order of the successive method steps is shown forthe sake of illustrating but one example, with that said, the order ofmethod steps can proceed in any variety of orders. In one embodiment ofthe present invention, the invention comprises a data processing methodfor administering a deferred variable annuity contract for a relevantlife, the annuity contract having a payment base, a contract value andlifetime benefit payments. The annuity contract processing routinestarts at (block 600). A withdrawal base is calculated at (block 602),which is preferably related to the previous premium payments andwithdrawals by the relevant life. The present method predetermines awithdrawal percent, which may be in the form of a withdrawal percentchart (block 604). If requested by the relevant life, the present methodperiodically accepts premium payments from the relevant life (block606), which increase the payment base and the contract value. Ifrequested by the relevant life and the covered life is older than apredetermined age (i.e. 60 years old), the present method periodicallycalculates a living benefit payment for the relevant life (block 608),which decreases the contract value. If requested by the relevant life,the present method periodically calculates a withdrawal payment (block610) that is in excess of the lifetime benefit payment for the relevantlife, which decreases each of the following: the contract value and thepayment base. Preferably, the lifetime benefit payment is determined bythe following formula:LBP withdrawal=(a Withdrawal Percent+a Deferral Bonus Percent)×(aWithdrawal Base),

-   -   wherein the withdrawal percent is preferably determined        according to a withdrawal percent chart and the deferral bonus        percent is a function of the number of years deferred by the        relevant life until taking a first lifetime benefit payment.        The annuity contract processing routine ends at (block 612).

Referring next to FIG. 7, depicted is a preferred embodiment of a systemon which the methods of the present invention may be implemented. In oneexample of the preferred embodiment, the insurance contract generatingsystem 714 would generally be used by an insurance provider 702, howeverthe system may be operated by any individual or organization offering aninsurance product as outlined in the present specification withoutdeparting from the spirit of the present invention. System 714 may beimplemented in many different ways such as part of a single standaloneserver or as a network server or servers, which may be distributedacross multiple computing systems and architectures. Preferably, thecentral processing computer or network server includes at least onecontroller or central processing unit (CPU or processor), at least onecommunication port or hub, at least one random access memory (RAM), atleast one read-only memory (ROM) and one or more databases or datastorage devices. All of these later elements are in communication withthe CPU to facilitate the operation of the network server.

The network server may also be configured in a distributed architecture,wherein the server components or modules are housed in separate units orlocations. Each of the modules described may be implemented as singleservers or one or more or all of the modules may be incorporated into asingle server. These servers will perform primary processing functionsand contain at a minimum, a RAM, a ROM, and a general controller orprocessor. In such an embodiment, each server is connected to acommunications hub or port that serves as a primary communication linkwith other servers, clients or user computers and other related devices.The communications hub or port may have minimal processing capabilityitself, serving primarily as a communications router. A variety ofcommunications protocols may be part of the system, including but notlimited to: Ethernet, SAP, SAS™, ATP, Bluetooth, GSM and TCP/IP.

In the preferred embodiment, all of the modules described herein areoperably inter-connected via a central communications bus 738. Thecommunications bus 738 is able to receive information from each of themodules, as well as to transmit information from one module to another.The insurance contract generating system 714 further includes a displaymodule 704, and a generating module 706. The generating module is usedfor generating an insurance contract, wherein the insurance contractprovides coverage to an individual or group for at least one eventdefined in the insurance contract.

The insurance contract generating system 714 additionally includes apayment module 708 for making payments to an insured individual or groupfor a predetermined period of time as defined by the deferred annuityinsurance contract.

The system further comprises a beneficiary module 710 for choosing abeneficiary to receive payments from the insurance provider in theinstance of an insured individual's death. Furthermore, the systemcomprises a dependent module 712 for offering an insurance contractstructured according to the methods of the present invention todependents of an individual eligible for the insurance contractdescribed herein.

Additionally, the insurance contract generating system 714 includes: astorage drive 716 for receiving data stored on a storage disc, aprocessing module 718 for processing digital data received by andcontained in the insurance contract generating system 714, acommunication module 720 for bi-directional communication with externaland telecommunications systems, a data storage module 722 for storingand managing digital information, a text data input module 724 forinputting data in the form of text, and a data input module 726 forconverting to digital format documents and images and inputting theminto the insurance contract generating system 714.

Finally, the insurance contract generating system 714 includes: an audiodata input module 728 for receiving and inputting audio information, anaudio data output module 730 for outputting data in audio format (i.e.recorded speech, synthetically generated speech from digital text, etc),a memory module 732 for temporarily storing information as it is beingprocessed by the processing module 718, a universal serial bus interfacemodule 734 for receiving and transmitting data to and from devicescapable of establishing a universal serial bus connection, and a digitaldata input interface module 736 for receiving data contained in digitalstorage devices.

Data storage device may include a hard magnetic disk drive, tape,optical storage units, CD-ROM drives, or flash memory. Such data storagedevices generally contain databases used in processing transactionsand/or calculations in accordance with the present invention. In oneembodiment, the database software creates and manages these databases.Insurance-related calculations and/or algorithms of the presentinvention are stored in storage device and executed by the CPU.

The data storage device may also store, for example, (i) a program(e.g., computer program code and/or a computer program product) adaptedto direct the processor in accordance with the present invention, andparticularly in accordance with the processes described in detailhereinafter with regard to the controller; (ii) a database adapted tostore information that may be utilized to store information required bythe program. The database includes multiple records, and each recordincludes fields that are specific to the present invention such asinterest rates, contract value, payment base value, step up percent,premiums, subscribers, payouts, claims, etc.

The program may be stored, for example, in a compressed, an uncompiledand/or an encrypted format, and may include computer program code. Theinstructions of the program may be read into a main memory of theprocessor from a computer-readable medium other than the data storagedevice, such as from a ROM or from a RAM. While execution of sequencesof instructions in the program causes the processor to perform theprocess steps described herein, hard-wired circuitry may be used inplace of, or in combination with, software instructions forimplementation of the processes of the present invention. Thus,embodiments of the present invention are not limited to any specificcombination of hardware and software.

Suitable computer program code may be provided for performing numerousfunctions such as providing a deferred annuity insurance contract to anindividual, generating a deferred annuity insurance contract, and makingpayments to the individual as defined in the deferred annuity insurancecontract. The functions described above are merely exemplary and shouldnot be considered exhaustive of the type of function, which may beperformed by the computer program code of the present inventions.

The computer program code required to implement the above functions (andthe other functions described herein) can be developed by a person ofordinary skill in the art, and is not described in detail herein.

The term “computer-readable medium” as used herein refers to any mediumthat provides or participates in providing instructions to the processorof the computing device (or any other processor of a device describedherein) for execution. Such a medium may take many forms, including butnot limited to, non-volatile media, volatile media, and transmissionmedia. Non-volatile media include, for example, optical or magneticdisks, such as memory. Volatile media include dynamic random accessmemory (DRAM), which typically constitutes the main memory. Common formsof computer-readable media include, for example, a floppy disk, aflexible disk, hard disk, magnetic tape, any other magnetic medium, aCD-ROM, DVD, any other optical medium, punch cards, paper tape, anyother physical medium with patterns of holes, a RAM, a PROM, an EPROM orEEPROM (electronically erasable programmable read-only memory), aFLASH-EEPROM, any other memory chip or cartridge, a carrier wave asdescribed hereinafter, or any other medium from which a computer canread.

Various forms of computer readable media may be involved in carrying oneor more sequences of one or more instructions to the processor (or anyother processor of a device described herein) for execution. Forexample, the instructions may initially be borne on a magnetic disk of aremote computer. The remote computer can load the instructions into itsdynamic memory and send the instructions over an Ethernet connection,cable line, or even telephone line using a modem. A communicationsdevice local to a computing device (or, e.g., a server) can receive thedata on the respective communications line and place the data on asystem bus for the processor. The system bus carries the data to mainmemory, from which the processor retrieves and executes theinstructions. The instructions received by main memory may optionally bestored in memory either before or after execution by the processor. Inaddition, instructions may be received via a communication port aselectrical, electromagnetic or optical signals, which are exemplaryforms of wireless communications or data streams that carry varioustypes of information.

Servers of the present invention may also interact and/or control one ormore user devices or terminals. The user device or terminal may includeany one or a combination of a personal computer, a mouse, a keyboard, acomputer display, a touch screen, LCD, voice recognition software, orother generally represented by input/output devices required toimplement the above functionality. The program also may include programelements such as an operating system, a database management system and“device drivers” that allow the processor to interface with computerperipheral devices (e.g., a video display, a keyboard, a computer mouse,etc).

For example, a user provides instructions for the amount of the livingbenefit payment that is requested. It should be understood that the usermay communicate with the computing system directly or indirectly throughanother party, such as the insurance provider 702. In the event the usercommunicates with an insurance provider 702, the insurance provider 702than receives and transfers information, to and from the insurancecontract generating system 714 via the text data input module 724, audiodata input module 728, audio data output module 730 and the displaymodule 704. For example, the relevant life may provide instructions tothe insurance provider 702 indicating the amount of living benefitpayments the relevant life would like to receive. Furthermore, as usedherein the data storage module 722 is also referred to as a storagedevice. The processing module 718 is contained within the insurancecontract generating system 714, which is coupled to the storage device,the storage device stores instructions that are utilized by theprocessor. The instructions comprise: (i) an instruction for calculatinga withdrawal base; (ii) an instruction for determining a withdrawalpercent; (iii) an instruction for calculating a lifetime benefitpayment; wherein the lifetime benefit payment withdrawal is determinedby the following formula: LBP withdrawal=(a withdrawal percent+adeferral bonus percent)×(the withdrawal base), wherein the deferralbonus percent is a function of the number of years deferred by therelevant life until taking a first lifetime payment.

Turning now to FIG. 8, shown are supplemental tables 800, 802, and 804,wherein each table illustrates exemplary values, which are strictly forthe purposes of illustration and are not meant to limit the scope of theinvention. Supplemental table 800 illustrates the initial investment orpayment base 808 invested by the relevant life. For this example, thepayment base 808 is $100,000. Additionally, table 800 illustrates theincrease rate 810. For illustration purposes, the increase rate 810 isset at 0.1%. As previously described, the increase value represents theadditional increase in the lifetime benefit payment that the relevantlife receives for each additional year that the relevant life defers thepayment. For example, if the relevant life defers the lifetime benefitpayment until the third year, thus passing up two years of lifetimebenefit payments, the relevant life is now entitled to receive anadditional 0.2% for each subsequent payment. Supplemental table 802illustrates various withdrawal percents 814, wherein each withdrawalpercent 814 corresponds to a different age range 812. Supplemental table804 illustrates various withdrawal percents 818, wherein each withdrawalpercent 818 corresponds to a different wait period 816. Eachsupplemental table 800, 802, and 804 provides information that ispertinent to the example illustrated by table 806.

Referring now to table 806, illustrated are exemplary lifetime benefitpayments made to the relevant life under various conditions. Morespecifically, the “Immediate W/D” column 824 represents the lifetimebenefit payments 834 made to the relevant life when a withdrawal is madewithout deferring the first payment. Thus, in this example, the relevantlife collected the first lifetime benefit payment 834 on the first yearof eligibility, wherein the first year of eligibility occurred when therelevant life turned 60, as indicated by “Age” column 820. Hence, byapplying the information from supplemental tables 800, 802 and 804, therelevant life is entitled to a 5.0% withdrawal rate of payment base 808(i.e. $100,000). Therefore, the relevant life receives $5,000 a year for26 years. “Wait 1” column 826 illustrates the lifetime benefit payments836 made to the relevant life when the withdrawal is made afterdeferring only the first eligible payment. Thus, the relevant lifecollected the lifetime benefit payment 836 on the second year ofeligibility. Hence, by implementing the information from supplementaltables 800, 802, and 804, the relevant life is now entitled to a 5.1%withdrawal rate. This withdrawal rate is derived by simply addingincrease rate 810, which is 0.1% to the 5.0% withdrawal rate entitled tothe relevant life, who happens to be 61 years of age. Therefore, therelevant life receives $5,100 a year for 25 years. “Wait 2” column 828operates based on the same principles as thoroughly described above.However, in this example, the relevant life defers the first twoeligible payments. Hence, by implementing the information fromsupplemental tables 800, 802, and 804, the relevant life is entitled toa 5.2% withdrawal rate. Therefore, the relevant life collects lifetimebenefit payments 838 in the amount of $5,200 a year for a total of 24years. The same principles are applied to “Wait 3” column 830 and “Wait4” column 832. Accordingly, the relevant life collects lifetime benefitpayments 840 and 842, respectively. “Duration” column 822 represents thelength of time in which the relevant life is eligible to receivelifetime benefit payments. For this example, table 806 illustrates 26years in total, however the invention should not be limited to thisrange. Additionally, although the length of time is represented inyears, various other periods of time may be used (i.e. days, weeks,months, decades, etc.). “Age” column 820 simply tracks the age of therelevant life.

FIG. 9 illustrates a graph 900, titled “Guaranteed Lifetime BenefitPayments 10 bps Annual Increase Issue Age 60,” which further illustratesthe example represented by table 806 of FIG. 8. More specifically, graph900 includes a “Guaranteed Lifetime Benefit” or withdrawal scale 902,which illustrates withdrawal values or lifetime benefit payments 916,918, 920, 922, and 924 as a function of age 904 during a 16 year period,ranging from the ages of 60 to 75. The function of age 904 is measuredin years, but as previously mentioned above, may be measured in otherperiods of time (days, weeks, months, decades, etc.) and is illustratedon the x-coordinate of graph 900 so as to accurately correspond to table806 of FIG. 8. Essentially, graph 900 visually illustrates the examplerepresented within table 806 of FIG. 8. The key 926 provided by FIG. 9illustrates the symbols used to represent which line on graph 900corresponds to the respective column of table 806. More specifically,“immediate W/D” column 824 is graphically illustrated on graph 900 by“Immediate W/D” line 906, which is represented by a line containingsquares. For example, once the relevant life turns 60, “Immediate W/D”line 906 accurately illustrates a lifetime benefit payment 916 of$5,000. Furthermore, “immediate W/D” line 906 stabilizes at $5,000 withrespect to the relevant life's age throughout graph 900, thus,accurately expressing the lifetime benefit payments 834 of “ImmediateW/D” column 824 of table 806. Additionally, graph 900 visuallyillustrates each of the above-referenced columns 826, 828, 830, and 832by lines 908, 910, 912, and 914 respectively. Therefore, each line 906,908, 910, 912, and 914 illustrated on graph 900 directly corresponds toeach of the above-referenced columns 824, 826, 828, 830, and 832 oftable 806, respectively.

It should be understood that several of the method steps of the presentinvention require a computer in order to be able to determine therespective values. In other words, a computer is required to use themethod of the present invention; that is to say the calculations andappropriate data records must be accomplished by computer. For example,in one embodiment of the present invention, the payment base is relatedto premium payments by the relevant life, wherein some of the premiumpayments may be discretionary. In one embodiment, the lifetime benefitpayment is dependent on a predetermined withdrawal percent chart thatprovides a particular withdrawal percent for each respective attainedage of the relevant life, and is predetermined by the company issuingthe annuity and/or the relevant life. Preferably, the withdrawal percentis based on the attained age of the relevant life and is providedaccording to the withdrawal percent chart that is predetermined by thecompany issuing the annuity.

The annuity commencement date is discretionary and is selected by thecompany issuing the annuity and/or the relevant life, with certainrestrictions. The initial guaranteed death benefit amount isdiscretionary and is determined by the company issuing the annuityand/or the relevant life. Preferably, the company issuing the annuitysets the initial guaranteed death benefit amount for calculationpurposes. In a preferred embodiment, the initial guaranteed deathbenefit amount is equal to the payment base.

The lifetime benefit payment is paid periodically: such as yearly,quarterly, monthly, weekly, and the like. The lifetime benefit paymentthat is requested by the relevant life for a given period may be anyamount greater than zero and equal to or less than (the WithdrawalPercent+a deferral bonus percent)×(a Withdrawal Base), wherein thedeferral bonus percent is a function of the number of years deferred bythe relevant life until taking a first lifetime benefit payment.Preferably, the withdrawal percent chart provides a particularwithdrawal percent for each respective attained age of the relevantlife's life. The available lifetime benefit payment is determined ateach period by the aforementioned formula.

In another embodiment, the deferral bonus percent corresponds to thenumber of the current year of the contract until taking a first lifetimebenefit payment, rather than the number of completed years that havebeen deferred.

In one embodiment, the deferral bonus percent is a predetermined percentfor every 5 years of deferral before the relevant life takes a firstlifetime benefit payment.

The predetermined percent may be in the range of 0% to 5.0%, morepreferably in the range of 0.1% to 2.0%, and most preferably in therange of 0.2% to 1.0%. The length of time established for tracking thedeferral bonus may be in the range of 2 to 10 years, more preferably 3to 8 years, and most preferably 5 years.

In one embodiment, the relevant life does not have to wait for thecontract anniversary date in order to request the withdrawal percentthat corresponds to the attained age of the relevant life's life asprovided by a predetermined withdrawal percent chart.

The withdrawal base may be equal to the amount of the original premium,the payment base, the contract value, or the greater of the payment baseand the contract value. In most cases, the value of (the PaymentBase)×(the Withdrawal Percent) will not be equal to (the presentContract Value)×(the Withdrawal Percent). Therefore, in some embodimentsthe higher of these two values is the highest available lifetime benefitpayment available for that period. However, the relevant life does nothave to elect the highest possible available lifetime benefit payment.The value that is requested, if any, for the lifetime benefit paymentfor that period will be subtracted from the contract value, but not fromthe payment base. Therefore, the higher the lifetime benefit paymentrequested for a period, then the greater the possible impact on thevalue of (the present Contract Value)×(the Withdrawal Percent) for thesubsequent period.

Preferably, the withdrawal percent is a function of the attained age ofthe relevant life's life. Further, the deferral bonus percent is afunction of the number of years deferred by the relevant life untiltaking a first lifetime benefit payment. Significantly, the age of therelevant life is irrelevant for determining the deferral bonus percent.In one embodiment, however, the relevant life must be a minimum age tobegin taking lifetime benefit payments. Further, in one embodiment, therelevant life must wait a minimum number of years to begin takinglifetime benefit payments. In one embodiment, the minimum number ofyears is set at 3 years.

In one embodiment, the withdrawal percent chart has a minimum withdrawalpercent of 5.0% for any given attained age. Other minimum withdrawalpercents may be used. Preferably, the first few attained ages that arelisted in the withdrawal percent chart are set to the minimum withdrawalpercent value. Preferably, each of the attained ages of 60-64 of thewithdrawal percent chart has a 5.0% withdrawal percent.

In one embodiment, the withdrawal percent chart has a maximum withdrawalpercent of 7.0% for any given attained age. Other maximum withdrawalpercents may be used. Preferably, the withdrawal percents are groupedinto several attained age ranges until the maximum withdrawal percent isreached. Preferably, each of the attained ages 80 and over of thewithdrawal percent chart has a 7.0% withdrawal percent.

In a preferred embodiment, the withdrawal percent chart is as follows:

TABLE 5 Available Withdrawal Attained Age Percentage 60-64 5.0% 65-695.0% 70-74 6.0% 75-79 6.5% 80+ 7.0%

In one embodiment, once the first lifetime benefit payment is taken,then the withdrawal percent is fixed for the remainder of the contract.In another embodiment, the withdrawal percent continues to rise with therelevant life's age, no matter if the relevant life has already begun totake lifetime benefit payments. In another embodiment, the withdrawalpercent may either increase or decrease over the term of the annuity.Alternatively, the withdrawal percent may fluctuate over the term of theannuity.

In a further embodiment, the present method further comprises the stepof collecting a rider fee or collecting an account maintenance fee. Inanother embodiment, the present method further comprises the step of:calculating a death benefit for a beneficiary upon the death of therelevant life, wherein the death benefit is the greater of: (a) apredetermined guaranteed death benefit amount; and (b) the presentcontract value. Alternatively, the guaranteed death benefit is paid tothe beneficiary only if the relevant life dies during the accumulationphase. Preferably, the value of the annuity payments, if any, equals thevalue of the most recent guaranteed lifetime benefit payment.

In another embodiment, the present invention comprises a deferredvariable annuity contract comprising: (a) means for calculating awithdrawal base; (b) means for determining a withdrawal percent; (c)means for calculating a lifetime benefit payment; wherein the lifetimebenefit payment is determined by the following formula:LBP withdrawal=(a Withdrawal Percent+a deferral bonus percent)×(aWithdrawal Base),

-   -   wherein the deferral bonus percent is a function of the number        of years deferred by the relevant life until taking a first        lifetime benefit payment.

In another embodiment, the present invention comprises in a system foradministering a deferred variable annuity contract during theaccumulation phase, the improvement comprising: administration meansoperative to calculate a lifetime benefit payment, wherein the lifetimebenefit payment is determined by the following formula:LBP withdrawal=(a Withdrawal Percent+a deferral bonuspercent)×(Withdrawal Base),

-   -   wherein the deferral bonus percent is a function of the number        of years deferred by the relevant life until taking a first        lifetime benefit payment.

In another embodiment, the annuity contract includes a step-up provisionwherein the payment base is increased in response to positiveperformance of the underlying investments of the contract for a givenperiod.

Other formulas may be utilized to determine the available lifetimebenefit payment, wherein the withdrawal base is related to other valuesbesides the payment base and/or the contract value.

The following description and examples further illustrate the preferredfeatures of the present invention.

Each time a lifetime benefit payment request is received, the withdrawalpercent is provided by preferably utilizing the withdrawal percentchart. Preferably, the withdrawal percent chart provides a particularwithdrawal percent for each respective attained age of the relevantlife's life. In this embodiment, the withdrawal percent is determined bylooking up the corresponding attained age of the relevant life on thewithdrawal percent chart. In one embodiment, the relevant life does nothave to wait for the contract anniversary date in order to request thewithdrawal percent that corresponds to the predetermined withdrawalpercent chart. The Lifetime Benefit Payment withdrawal amount is thendetermined by the following formula:LBP withdrawal=(the Withdrawal Percent+a deferral bonus percent)×(aWithdrawal Base),

-   -   wherein the withdrawal percent is preferably determined by said        withdrawal percent chart. The deferral bonus percent is a        function of the number of years deferred by the relevant life        until taking a first lifetime benefit payment. The withdrawal        base may be equal to the original premium, the payment base, the        contract value, or the greater of the payment base and the        contract value.        In the embodiment where the withdrawal base is equal to the        greater of the payment base and the contract value, a test will        be performed to determine the greater of: (i) (the Payment        Base)×(the Withdrawal Percent+the deferral bonus percent);        and (ii) (the Contract Value)×(the Withdrawal Percent+the        deferral bonus percent). The “guaranteed lifetime benefit        payment” is equal to (the Payment Base)×(the Withdrawal        Percent+the deferral bonus percent); and the “maximum lifetime        benefit payment” is equal to (the Contract Value)×(the        Withdrawal Percent+the deferral bonus percent). The relevant        life may request a lifetime benefit payment amount during each        period that is up to the LBP withdrawal amount, which in one        embodiment is the greater of the “guaranteed lifetime benefit        payment” and the “maximum lifetime benefit payment”.

The following examples illustrate one embodiment of the present methodand system. The following withdrawal percent chart is set for thefollowing example. Such predetermined values for the percents and theattained age ranges for the withdrawal percent chart are exemplary andare used strictly for the purposes of illustration. For example, thepredetermined withdrawal percentages may be in the range of 0% to 100%,and more preferably in the range of 0% to 50%. Preferably, there is aminimum age at which the relevant life may purchase the annuity contractof the present invention. In one embodiment, said minimum age is 40years old.

Withdrawal Percent Chart:

TABLE 6 Available Withdrawal Attained Age Percentage 60-64 5.0% 65-695.5% 70-74 6.0% 75-79 6.5% 80+ 7.0%Note: For purposes of illustration, the relevant life cannot takelifetime benefit payments until reaching age 60.Deferral Bonus Percent: For the purposes of illustration, the deferralbonus percent is 0.25% percent for every 5 years of deferral before therelevant life takes a first lifetime benefit payment.

Example 1

-   -   Relevant life buys an annuity contract at age 40 and 8 months;    -   Relevant life does not request a first lifetime benefit payment        until he is at age 65 and 10 months;    -   Relevant life is eligible for a 5.5% withdrawal percent at ages        65-69 as determined by the withdrawal percent chart;    -   Relevant life has deferred the first lifetime benefit payment        for 25 years, or five 5-year deferral periods;    -   Therefore the deferral bonus percent is 5×0.25% 1.25%;    -   Consequently, relevant life is now eligible for a 6.75% total        withdrawal percent because the withdrawal percent from the        predetermined withdrawal percent chart is 5.5% and the deferral        bonus percent is 1.25%.

Example 2

-   -   Relevant life buys an annuity contract at age 50 and 8 months;    -   Relevant life does not request a first lifetime benefit payment        until he is at age 65 and 10 months;    -   Relevant life is eligible for a 5.5% withdrawal percent at ages        65-69 as determined by the withdrawal percent chart;    -   Relevant life has deferred the first lifetime benefit payment        for 15 years, or three 5-year deferral periods;    -   Therefore the deferral bonus percent is 3×0.25%=0.75%;    -   Relevant life is eligible for a 6.25% total withdrawal percent        because the withdrawal percent from the predetermined withdrawal        percent chart is 5.5% and the deferral bonus percent is 0.75%.

Example 3

-   -   Relevant life buys an annuity contract at age 60 and 8 months;    -   Relevant life does not request a first lifetime benefit payment        until he is at age 65 and 10 months;    -   Relevant life is eligible for a 5.5% withdrawal percent at ages        65-69 as determined by the withdrawal percent chart;    -   Relevant life has deferred the first lifetime benefit payment        for 5 years, or one 5-year deferral period;    -   Therefore the deferral bonus percent is 1×0.25%=0.25%;    -   Relevant life is eligible for a 5.75% total withdrawal percent        because the withdrawal percent from the predetermined withdrawal        percent chart is 5.5% and the deferral bonus percent is 0.25%.

Having thus described the invention in rather full detail, it will beunderstood that such detail need not be strictly adhered to, but thatadditional changes and modifications may suggest themselves to oneskilled in the art, all falling within the scope of the invention asdefined by the subjoined claims.

While the present invention has been described with reference to thepreferred embodiment and several alternative embodiments, whichembodiments have been set forth in considerable detail for the purposesof making a complete disclosure of the invention, such embodiments aremerely exemplary and are not intended to be limiting or represent anexhaustive enumeration of all aspects of the invention. The scope of theinvention, therefore, shall be defined solely by the following claims.Further, it will be apparent to those of skill in the art that numerouschanges may be made in such details without departing from the spiritand the principles of the invention. It should be appreciated that thepresent invention is capable of being embodied in other forms withoutdeparting from its essential characteristics.

1. A computer system for processing data associated with a deferredannuity contract during the accumulation phase, comprising: a datastorage device storing data associated with the deferred annuitycontract, including data indicative of a contract value, a withdrawalbase value, a withdrawal percent value, and a formula for determining avalue of benefit payments available during a current period inaccordance with a guarantee and without reduction of the withdrawal basevalue; and a processor in communication with the storage device, theprocessor configured to: receive data indicative of an amount of awithdrawal requested by a relevant life; responsive to receipt of thedata indicative of an amount of a withdrawal requested by a relevantlife, determine a maximum amount available for withdrawal withoutreduction of the withdrawal base value by calculating the maximum amountavailable based on multiplying the withdrawal base value by the sum ofthe withdrawal percent value and a factor equal to the product of (i) anumber of completed periods of eligibility to withdraw without awithdrawal being taken and (ii) a percentage; determine whether theamount of the withdrawal, together with amounts of other withdrawalsrequested during the current period, is greater than the maximum amountavailable for withdrawal; and responsive to determining that the amountof the withdrawal, together with amounts of other withdrawals requestedduring the current period, is not greater than the maximum amountavailable for withdrawal, provide an output signal having dataindicative that the withdrawal base value will not be reduced as aresult of the withdrawal.
 2. The computer system of claim 1, wherein theprocessor is configured to determine the maximum amount available forwithdrawal without reduction of the withdrawal base value by accessingthe maximum amount from the storage device.
 3. The computer system ofclaim 1, further comprising a display module in communication with theprocessor for receiving the output signal and displaying a user-readableindication that the withdrawal base value will not be reduced as aresult of the withdrawal.
 4. The computer system of claim 1, wherein thedeferred annuity contract is a deferred variable annuity.
 5. Thecomputer system of claim 1, further comprising a payment module incommunication with the processor for effecting payment of the requestedwithdrawal amount to the relevant life.
 6. The computer system of claim1, wherein the withdrawal percent value is dependent on an age of therelevant life.
 7. A computer-implemented method for processing dataassociated with a deferred annuity contract during the accumulationphase, comprising: receiving by a processor data indicative of an amountof a withdrawal, from the deferred annuity contract, requested by arelevant life; accessing by the processor, from a data storage device incommunication with the processor, data associated with the deferredannuity contract, including data indicative of a withdrawal base value,a withdrawal percent value, and a formula for determining a value ofbenefit payments available during a current period in accordance with aguarantee and without reduction of the withdrawal base value; andresponsive to the receipt of the data indicative of an amount of awithdrawal requested by a relevant life, determining by the processor amaximum amount available for withdrawal without reduction of thewithdrawal base value, the maximum amount available being calculated bythe processor based on multiplying the withdrawal base value by the sumof the withdrawal percent value and a factor equal to the product of (i)a number of completed periods of eligibility to withdraw without awithdrawal being taken and (ii) a percentage; determining by theprocessor whether the amount of the withdrawal, together with amounts ofother withdrawals requested during the current period, is greater thanthe maximum amount available for withdrawal; and responsive todetermining that the amount of the withdrawal, together with amounts ofother withdrawals requested during the current period, is not greaterthan the maximum amount available for withdrawal, providing by theprocessor an output signal having data indicative that the withdrawalbase value will not be reduced as a result of the withdrawal.
 8. Thecomputer-implemented method of claim 7, wherein the periods ofeligibility are each in the range from three years to eight years inlength.
 9. The computer-implemented method of claim 8, wherein thepercentage is in the range from 0.2% to 1.0%.
 10. Thecomputer-implemented method of claim 9, wherein the withdrawal percentvalue is the range from 5% to 7%.
 11. The computer-implemented method ofclaim 7, further comprising receiving the output signal via acommunications bus by a display device in communication with theprocessor, and displaying by the display device a user-readableindication that the withdrawal base value will not be reduced as aresult of the withdrawal.
 12. The computer-implemented method of claim7, wherein the withdrawal percent value is based on an age of therelevant life during the current period.
 13. A non-transitorycomputer-readable medium having processor-executable instructions storedthereon, which instructions, when executed by a processor, cause theprocessor to: receive data indicative of an amount of a withdrawal, fromthe deferred annuity contract, requested by a relevant life; access,from a data storage device in communication with the processor, dataassociated with the deferred annuity contract, including data indicativeof a contract value, a withdrawal base value, a withdrawal percentvalue, and a formula for determining a value of benefit paymentsavailable during a current period in accordance with a guarantee andwithout reduction of the withdrawal base value; and responsive to thereceipt of the data indicative of an amount of a withdrawal requested bya relevant life, determine a maximum amount available for withdrawalwithout reduction of the withdrawal base value, the maximum amountavailable being based on multiplying the withdrawal base value by thesum of the withdrawal percent value and a factor equal to the product of(i) a number of completed periods of eligibility to withdraw without awithdrawal being taken and (ii) a percentage; determine whether theamount of the withdrawal, together with amounts of other withdrawalsrequested during the current period, is greater than the maximum amountavailable for withdrawal; and responsive to determining that the amountof the withdrawal, together with amounts of other withdrawals requestedduring the current period, is not greater than the maximum amountavailable for withdrawal, provide an output signal having dataindicative that the withdrawal base value will not be reduced as aresult of the withdrawal.
 14. The non-transitory computer-readablemedium of claim 13, wherein at least one of the eligibility periods isone year in length.
 15. The non-transitory computer-readable medium ofclaim 13, wherein the instructions, when executed by the processor,further cause the processor to calculate an updated contract value byaccessing a current contract value from the data storage device,subtracting the amount of the withdrawal from the current contractvalue, and causing the calculated updated contract value to be stored inthe data storage device.
 16. The non-transitory computer-readable mediumof claim 13, wherein the instructions, when executed by the processor,further cause the processor to, responsive to determining that theamount of the withdrawal, together with amounts of other withdrawalsrequested during the current period, is greater than the maximum amountavailable for withdrawal, provide an output signal having dataindicative that the withdrawal base value will be reduced as a result ofthe withdrawal.
 17. The non-transitory computer-readable medium of claim13, wherein the withdrawal percent value is determined based on acurrent age of the relevant life, and is in the range from 5% to 7%, andthe percentage is in the range from 0.2% to 1.0%.
 18. The non-transitorycomputer-readable medium of claim 13, wherein the withdrawal percentvalue is determined based on an age of the relevant life at the date offirst withdrawal.